1) False. If you go to a less competitive school, students are likely to be as competitive, meaning you'll get all the badass stuff. That's what happened with me and all of my friends.
2) If you have the drive to find EC's that'll pay off any where but it will pay off 1000x more at a low-level school than an Ivy because more people are fighting over EC's.
On both points, I am a perfect example. The bottom line is working your ass off. Period. I got everrrrryyyyyyyyyyyyy awesome opportunity in college--paid, unpaid, w/e. I even got a job on wall street my senior year because I had better creds than our best business/finance majors. I got a 29 on my mcat, yes, so i'm not SUPER smart--but because of my 3.78 gpa and kickass EC's, i'm told they will easily outweigh my MCAT flub and there were numerous examples from my school of poeple getting in with worse states and less impressive EC's.
Of course, if you HAVE to go to harvard, this is not sound advice.